Revenue vs. Yield Management

Paper Summary:

This paper defines both revenue management and yield management, and then goes on to discuss the differences between the two. The paper further reviews the history of each and how each has been implemented in certain situations. The paper also reviews the issues surrounding each management method.

Contents:
Definition
History
Methods
Yield Management Outcomes

From the Paper:

"The majority of privately operated hotel chains have decided to follow more efficient yield management root and have variable pricing and are able to forecast visits, they are namely Marriott, Sheraton, Holiday Inn and others. They have more sophisticated forecasting system which attempts to predict not only nights to be spent by customers, but also "forecasting arrivals by length of stay and/or room rate" . When developing forecasting software most suitable for such hotels as Holiday Inn, Hilton, Sheraton, Hyatt, they targeted mainly such variables as length of stay and based on this room rate . Forecasting should consider the main economic factors influencing the demand for the hotel industry services, such as overall economic development internationally if the hotel is targeted at international visitors, local economic and social trends, expected events, attractions, holidays in the area likely to draw in visitors, competitive positions and competitiveness of other players in the industry, their long term and short term strategies and so on. "

Sample of Sources Used:

• Anonymous, A Conversation with Don Burr, Scorecard, Fourth Quarter, 1992, pp. 6-7.
• Anonymous, Adding to Forte's Fortune, Scorecard, Second Quarter, 1994, pp. 4-5.
• Barkers, J. Flexible Check-In Expands, Successful Meetings, Volume 47, 1998, January, p. 32.
• Bitran, G. R., Mondschein, S. V., An Application of Yield Management To The Hotel Industry Considering Multiple Day Stays, Operations Research, Volume 43, No. 3, May-June 1995, pp. 427-443.
• Choi, S., Mattila, A. S., Hotel Revenue Management And Its Impact On Customers' Perceptions Of Fairness, Journal of Revenue and Pricing Management, January 2004, Volume 2 (4), pp. 303-315.

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